Editor's Note

May/June 2012 The Twilight of the Civic-minded CEO

By Paul Glastris

The staggeringly high regard in which Americans once held Fortune 500 CEOs has certainly diminished in recent years. Back in the day, when they could fairly be described as “job creators,” CEOs were treated like folk heroes—think Jack Welch of GE or Lee Iacocca of Chrysler. But during the 2000s, U.S. multinationals have shed nearly 3 million American jobs, even as they’ve added 2.4 million employees overseas. For this act of national disinvestment CEOs have been paid handsomely. The gap between the compensation of the average CEO and that of the average U.S. worker has grown from around 70 to 1 in 1989 to more than 240 to 1 in 2010.

The interests of U.S. corporations seem to be gradually de-coupling from those of the country at large. A little-remarked-upon aspect of this slow divorce is the declining engagement of corporate titans in civic matters. In most medium-sized cities, for instance, the major banks have long since been bought up by Wall Street goliaths, and the CEOs who once led local civic boards and charities have been replaced by itinerant vice presidents less inclined or able to involve themselves in local affairs.

Yet as recently as the 1990s, the heads of Fortune 500 companies like Procter & Gamble, Kodak, and RJR Nabisco were energetic players in important policy debates, most notably the school reform movement that began in the ’80s and culminated in the passage of the No Child Left Behind Act (NCLB) in 2001. As the American public education system’s biggest customers, major U.S. companies had strong reasons for wanting schools to do a better job. They needed graduates with stronger math and reading skills to keep up with the more technologically sophisticated work being done on factory floors and in back offices. And they needed good local public schools in the metro areas where they were headquartered to lure the best professional talent.

And so, when progressive-minded governors were pressing their legislatures to impose higher academic standards and high-stakes tests on the local schools, the CEOs had their backs. And those governors who weren’t on board had the CEOs in their faces. The corporate chieftains supported President Bill Clinton when he tried, unsuccessfully, to make federal aid to the states contingent on reform; then they backed George W. Bush’s successful effort to do so via NCLB.

In the last decade, however, the CEOs’ interest and engagement in school reform has waned. Experts who have noticed this trend—people such as Marc Tucker of the National Center on Education and the Economy, Robert Schwartz of the Harvard Graduate School of Education, and Susan Traiman, former director of public policy at the Business Roundtable—offer several explanations. The tenure of the average CEO is shorter, and the ever-increasing demands for quarterly results have left little room for long-range thinking and outside activities. But most of all, with labor markets globalizing and nearly all economic growth occurring overseas, chief executives know that the economic strength of their enterprises simply isn’t as dependent as it once was on the American workforce.

As the CEOs have increasingly disengaged from school reform, a new breed of businessmen, with a different mentality, has involved itself: high-tech entrepreneurs and venture capitalists on the West Coast, and hedge fund managers and other Wall Street types in the East. Where the CEOs were pragmatic managers, bent on fixing the public schools as many of them had reengineered their own giant enterprises—by instituting better systems of accountability—the high-tech and Wall Street guys are more entrepreneurial and libertarian in their orientation, more disdainful of bureaucracy. They’ve put their money and energy into promoting charter schools, vouchers, and other “disruptive” interventions aimed at creating alternatives to—or perhaps overthrowing—the existing order.

Yet even as charter schools have expanded, the standards-and-testing model of reform continues to advance, thanks to some under-the-political-radar work by savvy state leaders, a few foundations, and the Obama administration. As our special report in this issue explains, a demanding new set of common standards, and new tests aligned to them, will soon be rolled out in nearly every state in the country, with the aim of cultivating the kind of higher-order-thinking skills Americans need if the country is to compete in the global economy.

To succeed, this new wave of school reform will require smart and energetic follow-through from state governments and ongoing support from Washington. Yet predictably, these reforms are already meeting resistance from some Tea Party conservatives and liberals allied with the teacher’s unions. Now would be a good time for Fortune 500 CEOs to step in. Problem is, there seems to be less and less reason for them to give a damn.

Paul Glastris is the editor in chief of the Washington Monthly. This article was supported by the American Independent Institute.

Comments

  • Matthew G. Saroff on May 22, 2012 1:45 PM:

    In terms of education at least, you are missing an underlying cause, the creation of an educational reform orthodoxy which has as its goal the promulgation of a for-profit "educational industrial complex."

    It's all about Wall Street types making their vig.